Respondent union, which represents most of the stage actors and
actresses in the United States, has entered into collective
bargaining agreements with virtually all major theatrical producers
throughout the country, fixing minimum (scale) wages and other
conditions of employment for those represented by the union.
Because of abuses by theatrical agents who, as independent
contractors, negotiated employment contracts for actors and
actresses with producers, particularly abuses as to the extraction
of high commissions tending to undermine collectively bargained
rates of compensation, the union, in 1928, unilaterally established
a licensing system for the regulation of agents, prohibiting union
members from using an agent who has not obtained a license from the
union. The essential elements of the licensing system have remained
unchanged. To obtain a license, an agent must agree to comply with
union regulations which,
inter alia, prohibit agent
commissions on scale portions of wages received by an actor or an
actress from a producer, limit commissions on wages in excess of
scale pay, and require payment to the union of franchise fees.
Petitioners, agents who refused to obtain union licenses,
instituted this action, contending that the union's regulations
violated §§ 1 and 2 of the Sherman Act. After trial, the District
Court dismissed the complaint, finding that the union's agency
franchise system was protected from liability by the antitrust
exemptions of unions and their members arising under the Clayton
Act and the Norris-LaGuardia Act. The Court of Appeals affirmed,
determining that the central feature of the union's franchising
system -- the exaction of an agreement by agents as to their
commissions -- was immune from antitrust challenge. The court
suggested that, if the exactions of franchise fees exceeded the
union's costs in administering its license system, they could not
legally be collected; but despite the lack of any cost evidence at
trial, the court concluded that the fees were sufficiently low that
a remand on the point would not serve any useful purpose.
Held:
1. Labor unions, acting in their self-interest and not in
combination with nonlabor groups, enjoy statutory exemption from
Sherman Act
Page 451 U. S. 705
liability, but the exemption does not apply when a union
combines with a "nonlabor group," or persons who are not "parties
to a labor dispute" within the meaning of the Norris-LaGuardia Act.
United States v. Hutcheson, 312 U.
S. 219. Here, the union's franchising of agents did not
involve any combination between the union and any "nonlabor
groups." The record amply supports the conclusion that there was no
combination between the union and the theatrical producers, and the
determination of whether the combination between the union and
those agents who agreed to become franchised was a combination with
a "nonlabor group" depends on whether there was
"job or wage competition or some other economic
interrelationship affecting legitimate union interests between the
union members and the independent contractors."
Musicians v. Carroll, 391 U. S. 99,
391 U. S. 106.
Because of the peculiar structure of the legitimate theater
industry, where it is customary, if not essential, for union
members to secure employment through agents whose fees are
calculated as a percentage of the member's wage -- thus making it
impossible for the union to defend even the integrity of the
minimum wages it has negotiated with producers without regulation
of agency fees -- the union's regulations are within the labor
exemption. Agents must, therefore, be considered a "labor group,"
and their controversy with the union is plainly a "labor dispute"
as defined in the Norris-LaGuardia Act. The union's regulations are
also clearly designed to promote its legitimate self-interest. Pp.
451 U. S.
713-722.
2. However, the union's justification for the franchise fees --
based only on the suggestion in the most general terms that they
are related to the basic purposes of its regulations -- is
inadequate to warrant the conclusion that the fees are a
permissible component of the exempt regulatory system. P.
451 U. S.
722.
622 F.2d 647, affirmed in part, reversed in part, and
remanded.
STEWART, J., delivered the opinion of the Court, in which WHITE;
BLACKMUN, POWELL, REHNQUIST, and STEVENS, JJ., joined, and in all
but Part II-D of which BURGER, C.J., and BRENNAN and MARSHALL, JJ.,
joined. BRENNAN, J., filed an opinion concurring in part and
dissenting in part, in which BURGER, C.J., and MARSHALL, J.,
joined,
post, p.
451 U. S.
723.
Page 451 U. S. 706
JUSTICE STEWART delivered the opinion of the Court.
The respondent Actors' Equity Association (Equity) is a union
representing the vast majority of stage actors and actresses in the
United States. It enters into collective bargaining agreements with
theatrical producers that specify minimum wages and other terms and
conditions of employment for those whom it represents. The
petitioners are independent theatrical agents who place actors and
actresses in jobs with producers. The Court of Appeals for the
Second Circuit held that the respondents' [
Footnote 1] system of regulation of theatrical agents
is immune from antitrust liability by reason of the statutory labor
exemption from the antitrust laws, 622 F.2d 647. [
Footnote 2] We granted certiorari to consider
the availability of that exemption in the circumstances presented
by this case. 449 U.S. 991.
I
A
Equity is a national union that has represented stage actors and
actresses since early in this century. Currently representing
approximately 23,000 actors and actresses, it has collective
bargaining agreements with virtually all major theatrical producers
in New York City, on and off Broadway,
Page 451 U. S. 707
and with most other theatrical producers throughout the United
States. The terms negotiated with producers are the minimum
conditions of employment (called "scale"); an actor or actress is
free to negotiate wages or terms more favorable than the
collectively bargained minima.
Theatrical agents are independent contractors who negotiate
contracts and solicit employment for their clients. The agents do
not participate in the negotiation of collective bargaining
agreements between Equity and the theatrical producers. If an agent
succeeds in obtaining employment for a client, he receives a
commission based on a percentage of the client's earnings. Agents
who operate in New York City must be licensed as employment
agencies, and are regulated by the New York City Department of
Consumer Affairs pursuant to New York law, which provides that the
maximum commission a theatrical agent may charge his client is 10%
of the client's compensation.
In 1928, concerned with the high unemployment rates in the
legitimate theater and the vulnerability of actors and actresses to
abuses by theatrical agents, [
Footnote 3] including the extraction of high commissions
that tended to undermine collectively bargained rates of
compensation, Equity unilaterally established a licensing system
for the regulation of agents. The regulations permitted Equity
members to deal only with those agents who obtained Equity licenses
and thereby agreed to meet the conditions of representation
prescribed by Equity. Those members who dealt with nonlicensed
agents were subject to union discipline.
The system established by the Equity regulations was immediately
challenged. [
Footnote 4] In
Edelstein v. Gillmore, 35 F.2d
Page 451 U. S. 708
723! the Court of Appeals for the Second Circuit concluded that
the regulations were a lawful effort to improve the employment
conditions of Equity members. In an opinion written by Judge Swan
and joined by Judge Augustus N. Hand, [
Footnote 5] the court said:
"The evils of unregulated employment agencies (using this term
broadly to include also the personal representative) are set forth
in the defendants' affidavits and are corroborated by common
knowledge. . . . Hence the requirement that, as a condition to
writing new business with Equity's members, old contracts with its
members must be made to conform to the new standards, does not seem
to us to justify an inference that the primary purpose of the
requirement is infliction of injury upon plaintiff, and other
personal representatives in a similar situation, rather than the
protection of the supposed interests of Equity's members.
The
terms they insist upon are calculated to secure from personal
representatives better and more impartial service, at uniform and
cheaper rates, and to improve conditions of employment of actors by
theater managers. Undoubtedly the defendants intend to compel
the plaintiff to give up rights under existing contracts which do
not conform to the new standards set up by Equity, but, as already
indicated,
their motive in so doing is to benefit themselves
and their fellow actors in the economic struggle. The
financial loss to plaintiff is incidental to this purpose."
Id. at 726 (emphasis added). [
Footnote 6]
Page 451 U. S. 709
The essential elements of Equity's regulation of theatrical
agents have remained unchanged since 1928. [
Footnote 7] A member of Equity is prohibited, on pain
of union discipline, from using an agent who has not, through the
mechanism of obtaining an Equity license (called a "franchise"),
agreed to comply with the regulations. The most important of the
regulations requires that a licensed agent must renounce any right
to take a commission on an employment contract under which an actor
or actress receives scale wages. [
Footnote 8] To the extent a contract includes provisions
under which an actor or actress will sometimes receive scale pay --
for rehearsals or "chorus"
Page 451 U. S. 710
employment, for example -- and sometimes more, the regulations
deny the agent any commission on the scale portions of the
contract. Licensed agents are also precluded from taking
commissions on out-of-town expense money paid to their clients.
Moreover, commissions are limited on wages within 10% of scale pay,
[
Footnote 9] and an agent must
allow his client to terminate a representation contract if the
agent is not successful in procuring employment within a specified
period. [
Footnote 10]
Finally, agents are required to pay franchise fees to Equity. The
fee is $200 for the initial franchise, $60 a year thereafter for
each agent, and $40 for any subagent working in the office of
another. These fees are deposited by Equity in its general
treasury, and are not segregated from other union funds.
In 1977, after a dispute between Equity and Theatrical Artists
Representatives Associates (TARA) -- a trade association
representing theatrical agents,
see n 7,
supra -- a group of agents,
including the petitioners, resigned from TARA because of TARA's
decision to abide by Equity's regulations. These agents also
informed Equity that they would not accept Equity's regulations, or
apply for franchises. The petitioners instituted this lawsuit in
May, 1978, contending that Equity's regulations of theatrical
agents violated §§ 1 and 2 of the Sherman Act, 26 Stat. 209, as
amended, 15 U.S.C. §§ 1 and 2.
Page 451 U. S. 711
B
The District Court found, after a bench trial, that Equity's
creation and maintenance of the agency franchise system were fully
protected by the statutory labor exemptions from the antitrust
laws, and accordingly dismissed the petitioners' complaint.
478 F.
Supp. 496 (SDNY). Among its factual conclusions, the trial
court found that in the theatrical industry, agents play a critical
role in securing employment for actors and actresses:
"As a matter of general industry practice, producers seek actors
and actresses for their productions through agents. Testimony in
this case convincingly established that an actor without an agent
does not have the same access to producers or the same opportunity
to be seriously considered for a part as does an actor who has an
agent. Even principal interviews, in which producers are required
to interview all actors who want to be considered for principal
roles, do not eliminate the need for an agent, who may have a
greater chance of gaining an audition for his client."
"
* * * *"
"Testimony confirmed that agents play an integral role in the
industry; without an agent, an actor would have significantly
lesser chances of gaining employment."
Id. at 497, 502. The court also found
"no evidence to suggest the existence of any conspiracy or
illegal combination between Actors' Equity and TARA or between
Actors' Equity and producers,"
and concluded that
"[t]he Actors Equity franchising system was employed by Actors'
Equity for the purpose of protecting the wages and working
conditions of its members."
Id. at 499.
The Court of Appeals unanimously affirmed the judgment of the
District Court. It determined that the threshold issue was, under
United States v. Hutcheson, 312 U.
S. 219,
312 U. S. 232,
whether Equity's franchising system involved any combination
Page 451 U. S. 712
between Equity and any "non-labor groups" or persons who are not
"parties to a labor dispute." 622 F.2d at 648-649. If it did, the
court reasoned, the protection of the statutory labor exemption
would not apply.
First, the Court of Appeals held that the District Court had not
been clearly erroneous in finding no agreement, explicit or tacit,
between Equity and the producers to establish or police the
franchising system.
Ibid. Next, the court turned to the
relationship between the union and those agents who had agreed to
become franchised, in order to determine whether those agreements
would divest Equity's system of agency regulation of the statutory
exemption. Relying on
Musicians v. Carroll, 391 U. S.
99, the court concluded that the agents were themselves
a "labor group," because of their substantial "economic
interrelationship" with Equity, under which "the union [could] not
eliminate wage competition among its members without regulation of
the fees of the agents." 622 F.2d at 650, 651. Accordingly, since
the elimination of wage competition is plainly within the area of a
union's legitimate self-interest, the court concluded that the
exemption was applicable. [
Footnote 11]
After deciding that the central feature of Equity's franchising
system -- the union's exaction of an agreement by agents not to
charge commissions on certain types of work -- was immune from
antitrust challenge, the Court of Appeals turned to the
petitioners' challenge of the franchise fees exacted from agents.
Equity had argued that the fees were necessary to meet its expenses
in administering the franchise system, but no evidence was
presented at trial to show that the costs justified the fees
actually levied. The Court of Appeals suggested that, if the
exactions exceeded the true
Page 451 U. S. 713
costs, they could not legally be collected, as such exactions
would be unconnected with any of the goals of national labor policy
that justify the labor antitrust exemption. Despite the lack of any
cost evidence at trial, however, the appellate court reasoned that
the fees were sufficiently low that a remand to the District Court
on this point "would not serve any useful purpose."
Id. at
651.
II
A
Labor unions are lawful combinations that serve the collective
interests of workers, but they also possess the power to control
the character of competition in an industry. Accordingly, there is
an inherent tension between national antitrust policy, which seeks
to maximize competition, and national labor policy, which
encourages cooperation among workers to improve the conditions of
employment. [
Footnote 12] In
the years immediately following passage of the Sherman Act, courts
enjoined strikes as unlawful restraints of trade when a union's
conduct or objectives were deemed "socially or economically
harmful."
Duplex Printing Press Co. v. Deering,
254 U. S. 443,
254 U. S. 485
(Brandeis, J., dissenting). [
Footnote 13] In response to these practices, Congress
acted, first in the Clayton Act, 38 Stat. 731, and later in the
Norris-LaGuardia Act, 47 Stat. 70, to immunize labor unions and
labor disputes from challenge under the Sherman Act.
Section 6 of the Clayton Act, 15 U.S.C. § 17, declares that
human labor "is not a commodity or article of commerce," and
immunizes from antitrust liability labor organizations
Page 451 U. S. 714
and their members "lawfully carrying out" their "legitimate
object[ives]." Section 20 of the Act prohibits injunctions against
specified employee activities, such as strikes and boycotts, that
are undertaken in the employees' self-interest and that occur in
the course of disputes "concerning terms or conditions of
employment," and states that none of the specified acts can be
"held to be [a] violatio[n] of any law of the United States." 29
U.S.C. § 52. This protection is reemphasized and expanded in the
Norris-LaGuardia Act, which prohibits federal court injunctions
against single or organized employees engaged in enumerated
activities, [
Footnote 14]
and specifically forbids such injunctions notwithstanding the claim
of an unlawful combination or conspiracy. While the
Norris-LaGuardia Act's bar of federal court labor injunctions is
not explicitly phrased as an exemption from the antitrust laws, it
has been interpreted broadly as a statement of congressional policy
that the courts must not use the antitrust laws as a vehicle to
interfere in labor disputes. [
Footnote 15]
In
United States v. Hutcheson, 312 U.
S. 219, the Court held that labor unions acting in their
self-interest and not in combination with nonlabor groups enjoy a
statutory exemption from Sherman Act liability. After describing
the
Page 451 U. S. 715
congressional responses to judicial interference in union
activity,
id. at
312 U. S.
229-230, the Court declared that,
"[s]o long as a union acts in its self-interest and does not
combine with non-labor groups, the licit and the illicit under § 20
[of the Clayton Act] are not to be distinguished by any judgment
regarding the wisdom or unwisdom, the rightness or wrongness, the
selfishness or unselfishness of the end of which the particular
union activities are the means."
Id. at
312 U. S. 232
(footnote omitted). The Court explained that this exemption derives
not only from the Clayton Act, but also from the Norris-LaGuardia
Act, particularly its definition of a "labor dispute,"
see
n 14,
supra, in
which Congress "reasserted the original purpose of the Clayton Act
by infusing into it the immunized trade union activities as
redefined by the later Act." 312 U.S. at
312 U. S. 236.
Thus, under
Hutcheson, no federal injunction may issue
over a "labor dispute," and
"§ 20 [of the Clayton Act] removes all such allowable conduct
from the taint of being a 'violation of any law of the United
States,' including the Sherman [Act]."
Ibid. [
Footnote
16]
The statutory exemption does not apply when a union combines
with a "non-labor group."
Hutcheson, supra, at
312 U. S. 232.
Accordingly, antitrust immunity is forfeited when a union combines
with one or more employers in an effort to restrain trade. In
Allen Bradley Co. v. Electrical Workers, 325 U.
S. 797, for example, the Court held that a union had
violated the Sherman Act when it combined with manufacturers and
contractors to erect a sheltered local business market in
Page 451 U. S. 716
order "to bar all other business men from [the market], and to
charge the public prices above a competitive level."
Id.
at
325 U. S. 809.
[
Footnote 17] The Court
indicated that the union efforts would, standing alone, be exempt
from antitrust liability,
ibid., but, because the union
had not acted unilaterally, the exemption was denied. [
Footnote 18] Congress
"intended to outlaw business monopolies. A business monopoly is
no less such because a union participates, and such participation
is a violation of the Act."
Id. at
325 U. S. 811.
[
Footnote 19]
Page 451 U. S. 717
B
The Court of Appeals properly recognized that the threshold
issue was to determine whether or not Equity's franchising of
agents involved any combination between Equity and any "non-labor
groups," or persons who are not "parties to a labor dispute." 622
F.2d at 649 (quoting
Hutcheson, 312 U.S. at
312 U. S.
232). [
Footnote
20] And the court's conclusion that the trial court had not
been clearly erroneous in its finding that there was no combination
between Equity and the theatrical producers [
Footnote 21] to create or maintain the franchise
system is amply supported by the record.
The more difficult problem is whether the combination between
Equity and the agents who agreed to become franchised was a
combination with a "nonlabor group." The answer to this question is
best understood in light of
Musicians v. Carroll,
391 U. S. 99.
There, four orchestra leaders, members of the American Federation
of Musicians, brought an action based on the Sherman Act
challenging the union's unilateral system of regulating "club
dates," or one-time musical engagements. These regulations,
inter alia, enforced a
Page 451 U. S. 718
closed shop; required orchestra leaders to engage a minimum
number of "sidemen," or instrumentalists; prescribed minimum prices
for local engagements; [
Footnote
22] prescribed higher minimum prices for traveling orchestras;
and permitted leaders to deal only with booking agents licensed by
the union.
Without disturbing the finding of the Court of Appeals that the
orchestra leaders were employers and independent contractors, the
Court concluded that they were nonetheless a "labor group" and
parties to a "labor dispute" within the meaning of the
Norris-LaGuardia Act, and thus that their involvement in the union
regulatory scheme was not an unlawful combination between "labor"
and "nonlabor" groups. The Court agreed with the trial court that
the applicable test was whether there was
"job or wage competition or some other economic
interrelationship affecting legitimate union interests between the
union members and the independent contractors."
Id. at
391 U. S.
106.
The Court also upheld the restrictions on booking agents, who
were not involved in job or wage competition with union members.
Accordingly, these restrictions had to meet the "other economic
interrelationship" branch of the disjunctive test quoted above. And
the test was met because those restrictions were "
at least as
intimately bound up with the subject of wages' . . . as the price
floors." Id. at 391 U. S. 113
(quoting Teamsters v. Oliver, 362 U.
S. 605, 362 U. S.
606). The Court noted that the booking agent
restrictions had been adopted, in part, because agents had "charged
exorbitant fees, and booked engagements for musicians at wages . .
. below union scale." [Footnote
23]
Page 451 U. S. 719
C
The restrictions challenged by the petitioners in this case are
very similar to the agent restrictions upheld in the
Carroll case. [
Footnote
24] The essential features of the regulatory scheme are
identical: members are permitted to deal only with agents who have
agreed (1) to honor their fiduciary obligations by avoiding
conflicts of interest, (2) not to charge excessive commissions, and
(3) not to book members for jobs paying less than the union
minimum. [
Footnote 25] And
as in
Carroll, Equity's
Page 451 U. S. 720
regulation of agents developed in response to abuses by
employment agents who occupy a critical role in the relevant labor
market. [
Footnote 26] The
agent stands directly between union members and jobs, and is in a
powerful position to evade the union's negotiated wage
structure.
The peculiar structure of the legitimate theater industry, where
work is intermittent, where it is customary, if not essential, for
union members to secure employment through agents, and where
agents' fees are calculated as a percentage of a member's wage,
makes it impossible for the union to defend even the integrity of
the minimum wages it has negotiated without regulation of agency
fees. [
Footnote 27] The
regulations are "brought within the labor exemption [because they
are] necessary to assure that scale wages will be paid. . . ."
Carroll, 391 U.S. at
391 U. S. 112.
They "embody . . . a direct frontal attack upon a problem thought
to threaten the maintenance of the basic wage structure."
Teamsters v.
Oliver, 358 U.S.
Page 451 U. S. 721
283,
358 U. S. 294.
Agents must, therefore, be considered a "labor group," and their
controversy with Equity is plainly a "labor dispute" as defined in
the Norris-LaGuardia Act:
"representation of persons in negotiating, fixing, maintaining,
changing, or seeking to arrange terms or conditions of employment,
regardless of whether or not the disputants stand in the proximate
relation of employer and employee."
29 U.S.C. § 113(c).
Agents perform a function -- the representation of union members
in the sale of their labor -- that, in most nonentertainment
industries, is performed exclusively by unions. In effect, Equity's
franchise system operates as a substitute for maintaining a hiring
hall as the representative of its members seeking employment.
[
Footnote 28]
Finally, Equity's regulations are clearly designed to promote
the union's legitimate self-interest.
Hutcheson, 312 U.S.
at
312 U. S. 232.
In a case such as this, where there is no direct wage or job
competition between the union and the group it regulates, the
Carroll formulation to determine the
Page 451 U. S. 722
presence of a nonlabor group -- whether there is "
some . . .
economic interrelationship affecting legitimate union interests . .
. ,'" 391 U.S. at 391 U. S. 106
(quoting District Court opinion) -- necessarily resolves this
issue.
D
The question remains whether the fees that Equity levies upon
the agents who apply for franchises are a permissible component of
the exempt regulatory system. We have concluded that Equity's
justification for these fees is inadequate. Conceding that
Carroll did not sanction union extraction of franchise
fees from agents, [
Footnote
29] Equity suggests, only in the most general terms, that the
fees are somehow related to the basic purposes of its regulations:
elimination of wage competition, upholding of the union wage scale,
and promotion of fair access to jobs. But even assuming that the
fees no more than cover the costs of administering the regulatory
system, this is simply another way of saying that, without the
fees, the union's regulatory efforts would not be subsidized -- and
that the dues of Equity's members would perhaps have to be
increased to offset the loss of a general revenue source. [
Footnote 30] If Equity did not
impose these franchise fees upon the agents, there is no reason to
believe that any of its legitimate interests would be affected.
[
Footnote 31]
Page 451 U. S. 723
III
For the reasons stated, the judgment of the Court of Appeals is
affirmed in part and reversed in part, and the case is remanded for
proceedings consistent with this opinion.
It is so ordered.
[
Footnote 1]
The respondent Donald Grody is the executive secretary of
Equity.
[
Footnote 2]
The basic sources of organized labor's exemption from federal
antitrust laws are §§ 6 and 20 of the Clayton Act, 38 Stat. 731 and
738, 15 U.S.C. § 17 and 29 U.S.C. § 52, and §§ 4, 5, and 13 of the
Norris-LaGuardia Act, 47 Stat. 70, 71, and 73, 29 U.S.C. §§ 104,
105, and 113.
[
Footnote 3]
Such vulnerability was, and still remains, particularly acute
for actors and actresses without established professional
reputations, who have always constituted the overwhelming majority
of Equity's members.
[
Footnote 4]
The challenge was grounded on allegations of common law tortious
interference with business relationships.
[
Footnote 5]
Judge Manton dissented without opinion.
[
Footnote 6]
For contemporary descriptions of agent abuses of actors and
actresses,
see generally A. Harding, The Revolt of the
Actors (1929).
See also New Rules for Actors, N.Y. Times,
Sept. 24, 1928, p. 20, col. 3; The New Republic, Oct. 24, 1928, p.
263.
Cf. Ribnik v. McBride, 277 U.
S. 350,
277 U. S.
359-375 (Stone, J., joined by Holmes and Brandeis, JJ.,
dissenting) (general abuses by employment agencies, particularly at
times of widespread unemployment). The Court's decision in
Ribnik v. McBride was overruled unanimously in
Olsen
v. Nebraska, 313 U. S. 236.
[
Footnote 7]
The petitioners do not dispute this. The regulations have
undergone revision in some details, largely as a result of
negotiations between Equity and Theatrical Artists Representatives
Associates (TARA), which, until shortly before this litigation
began, was the only association voicing the concerns of agents with
regard to their representation of Equity members. Until their
voluntary resignation in late 1977, most of the petitioners were
members of TARA. The petitioners are now members of the National
Association of Talent Representatives (NATR). Unlike TARA, which
functions only in the legitimate theater field, NATR also functions
in the fields of motion pictures and television. In those fields,
agents operate under closely analogous agent regulations maintained
by the Screen Actors' Guild and the American Federation of
Television and Radio Artists.
The history of the negotiations and disputes between Equity and
TARA are described in the opinion of the District Court in the
present case.
478 F.
Supp. 496, 498 (SDNY).
[
Footnote 8]
The minimum, or "scale," wage varies. In August, 1977, for
example, the minimum weekly salary was $335 for Broadway
performances, and $175 for performances off Broadway. Scale wages
are set by a collective bargaining agreement between Equity and the
producers, to which the agents are not parties. When an agent
represents an actor or actress whose professional reputation is not
sufficient to demand a salary higher than scale, the agent hopes to
develop a relationship that will become continually more
remunerative as the performer's professional reputation grows, and
with it the power to demand an ever higher salary. No agent is
required to represent an actor or actress whom he does not wish to
represent .
[
Footnote 9]
It is Equity's view that commissions in the industry are not
necessarily related to efforts by the agents, and that an agent
often functions as little more than an "order taker," who is able
to collect a percentage of a client's wages for the duration of a
show for doing little more than answering a producer's telephone
call. Indeed, an agent may collect a commission on the salary of an
actor or actress he represents even if the client obtains the job
without the agent.
[
Footnote 10]
Equity argues that this restriction is necessary because there
is an incentive for agents to represent as many actors and
actresses as possible -- and not necessarily to serve them all well
-- because an agent receives a commission whenever his client is
employed at a salary higher than scale, regardless of the extent of
his involvement in obtaining employment for the client.
[
Footnote 11]
The Court of Appeals recognized that, even if there had been an
agreement between Equity and a "non-labor group," the agreement
might still have been protected from the antitrust laws under the
"non-statutory" exemption. 622 F.2d at 649, n. 1.
See Connell
Construction Co. v. Plumbers & Steamfitters, 421 U.
S. 616,
421 U. S. 622.
See n19,
infra.
[
Footnote 12]
See generally Meltzer, Labor Unions, Collective
Bargaining, and the Antitrust Laws, 32 U.Chi.L.Rev. 659 (1965);
Winter, Collective Bargaining and Competition: The Application of
Antitrust Standards to Union Activities, 73 Yale L.J. 14 (1963).
See also Leslie, Principles of Labor Antitrust, 66
Va.L.Rev. 1183 (1980).
[
Footnote 13]
See Winter,
supra, n 12, at 30-38.
[
Footnote 14]
As is true under the Clayton Act, the specified activities are
protected only in the context of a labor dispute. The
Norris-LaGuardia Act defines a labor dispute to include
"any controversy concerning terms or conditions of employment,
or concerning the association or representation of persons in
negotiating, fixing, maintaining, changing, or seeking to arrange
terms or conditions of employment, regardless of whether or not the
disputants stand in the proximate relation of employer and
employee."
29 U.S.C. § 113(c).
[
Footnote 15]
In
Milk Wagon Drivers v. Lake Valley Farm Products,
Inc., 311 U. S. 91,
311 U. S. 103,
the Court stated:
"For us to hold, in the face of [the Norris-LaGuardia Act], that
the federal courts have jurisdiction to grant injunctions in cases
growing out of labor disputes merely because alleged violations of
the Sherman Act are involved would run counter to the plain mandate
of the Act, and would reverse the declared purpose of
Congress."
[
Footnote 16]
See also Apex Hosiery Co. v. Leader, 310 U.
S. 469. There, in the Term preceding that in which the
Hutcheson case was decided, the Court reasoned that the
Sherman Act prohibits only restraints on "commercial competition,"
310 U.S. at
310 U. S. 497,
310 U. S. 499,
310 U. S.
510-511 -- or those market restraints designed to
monopolize supply, control prices, or allocate product distribution
-- and that unions are not liable where they merely further their
own goals in the labor market.
[
Footnote 17]
In
Hunt v. Crumboch, 325 U. S. 821,
decided the same day as
Allen Bradley, the Court ruled
that the labor exemption protected a union's boycott of a truck
hauler through successful secondary pressure on purchasers of the
hauler's services with whom the union had contracts, because of the
absence of union participation in a conspiracy with the hauler's
competitors.
See 325 U.S. at
325 U. S. 824;
Meltzer,
supra, n
12, at 677, and n. 74.
[
Footnote 18]
Mine Workers v. Pennington, 381 U.
S. 657, also dealt with a union combination with
employers, but the grounds of decision were unrelated to the
antitrust exemption.
[
Footnote 19]
Even where there are union agreements with nonlabor groups that
may have the effect of sheltering the nonlabor groups from
competition in product markets, the Court has recognized a
"nonstatutory" exemption to shield such agreements if they are
intimately related to the union's vital concerns of wages, hours,
and working conditions.
See, e.g., Meat Cutters v. Jewel Tea
Co., 381 U. S. 676.
This nonstatutory exemption was described as follows in
Connell
Construction Co. v. Plumbers & Steamfitters, 421 U.S. at
421 U. S.
622:
"The Court has recognized . . . that a proper accommodation
between the congressional policy favoring collective bargaining
under the NLRA and the congressional policy favoring free
competition in business markets requires that some union-employer
agreements be accorded a limited nonstatutory exemption from
antitrust sanctions. . . ."
"The nonstatutory exemption has its source in the strong labor
policy favoring the association of employees to eliminate
competition over wages and working conditions. Union success in
organizing workers and standardizing wages ultimately will affect
price competition among employers, but the goals of federal labor
law never could be achieved if this effect on business competition
were held a violation of the antitrust laws. The Court therefore
has acknowledged that labor policy requires tolerance for the
lessening of business competition based on differences in wages and
working conditions. Neither the District Court nor the Court of
Appeals in this case decided whether the nonstatutory exemption
would independently shield the respondents from the petitioners'
antitrust claims.
See n 11,
supra."
[
Footnote 20]
of course, a party seeking refuge in the statutory exemption
must be a bona fide labor organization, and not an independent
contractor or entrepreneur.
See Meat Drivers v. United
States, 371 U. S. 94;
Columbia River Packers Assn. v. Hinton, 315 U.
S. 143.
See generally 1 P. Areeda & D.
Turner, Antitrust Law § 229c, pp. 195-198 (1978). There is no
dispute about Equity's status as a bona fide labor
organization.
[
Footnote 21]
As the employers of Equity's members, producers are plainly a
"nonlabor group." Employers almost always will be a "nonlabor
group," although an exception has been recognized, for example,
when the employer himself is in job competition with his employees.
See Musicians v. Carroll, 391 U. S.
99 (orchestra leaders who both lead an orchestra and
play an instrument).
[
Footnote 22]
These consisted of a minimum scale for sidemen, a "leader's
fee," which was twice the sidemen's scale in orchestras of at least
four, and an additional 8% for social security, unemployment
insurance, and other expenses. In addition, if a leader did not
appear, but designated a subleader, and four or more musicians
performed, the leader was required to pay from his leader's fee 1.5
times the sidemen's scale to the subleader.
[
Footnote 23]
The Court did not explicitly determine whether the second prong
of the
Hutcheson test for the statutory exemption had been
met,
i.e., whether the union had acted in its
"self-interest." But, given its various findings that the
challenged restrictions were designed to cope with job competition
and to protect wage scales and working conditions, 391 U.S. at
391 U. S. 108,
391 U. S. 109,
391 U. S. 110,
391 U. S. 113,
it clearly did so
sub silentio.
[
Footnote 24]
Several cases before
Carroll also upheld union
regulation of the practices of independent entrepreneurs affecting
the wages or working conditions of union members.
See Milk
Wagon Drivers v. Lake Valley Farm Products, Inc., 311 U. S.
91;
Teamsters v. Oliver, 358 U.
S. 283 (
Oliver I);
Teamsters v.
Oliver, 362 U. S. 605
(
Oliver II). In
Milk Wagon Drivers, the Court
held that the union had engaged in a "labor dispute" within the
meaning of the Norris-LaGuardia Act when it attempted to organize
independent "vendors" who supplied milk to retail stores. There,
the union feared that the "vendor system" was designed to escape
the payment of union wages and the assumption of union-imposed
working conditions. In
Oliver I, the
Milk Wagon
Drivers decision was invoked to protect from state antitrust
challenge a union's successful efforts to prescribe, through
collective bargaining agreements, a wage scale for truckdrivers and
minimum rental fees for drivers who owned their own trucks. The
union feared that driver-owners, whose fees included not only an
entrepreneurial component but also a "wage" for the labor of
driving, might undercut the union scale by charging a fee that
effectively included a subscale wage component. The Court stated
that
"[t]he regulations embod[ied] . . . a direct frontal attack upon
a problem thought to threaten the maintenance of the basic wage
structure established by the collective bargaining contract."
358 U.S. at
358 U. S. 294.
See also Oliver II, supra at
362 U. S. 66
(after remand to the state court).
[
Footnote 25]
Indeed, the District Court in
Carroll, whose judgment
was affirmed by this Court "in its entirety," 391 U.S. at
391 U. S. 114,
drew parallels with the restrictions at issue in the present case.
The court noted that "[a]pparently, similar abuses by booking
agents existed in other fields too.
Edelstein v. Gillmore,
35 F.2d 723, 726 (2d Cir.1929) (actors)."
Carroll v.
AFM, 241 F.
Supp. 865, 892 (SDNY).
The petitioners argue that theatrical agents are
indistinguishable from "numerous [other] groups of persons who
merely supply products and services to union members," such as
landlords, grocers, accountants, and lawyers. But it is clear that
agents differ from these groups in two critical respects: the
agents control access to jobs and negotiation of the terms of
employment. For the actor or actress, therefore, agent commissions
are not merely a discretionary expenditure of disposable income,
but a virtually inevitable concomitant of obtaining employment.
[
Footnote 26]
See Carroll v. AFM, 241 F.Supp. at 881-882; Harding,
supra, n 6, at
319-325.
[
Footnote 27]
The Court of Appeals found that "the union
cannot
eliminate wage competition among its members without regulation of
the fees of the agents." 622 F.2d at 651 (emphasis added). Wage
competition is prevented not only by the rule precluding
commissions on scale jobs. Actors and actresses could also compete
over the percentage of their wages they were willing to cede to an
agent, subject only to the restrictions imposed by state law.
[
Footnote 28]
In many industries, unions maintain hiring halls and other job
referral systems, particularly where work is typically temporary
and performed on separate project sites, rather than fixed
locations. By maintaining halls, unions attempt to eliminate abuses
such as kickbacks, and to insure fairness and regularity in the
system of access to employment. In a 1947 Senate Report, Senator
Taft explained:
"The employer should be able to make a contract with the union
as an employment agency. The union frequently is the best
employment agency. The employer should be able to give notice of
vacancies, and, in the normal course of events, to accept men sent
to him by the hiring hall."
S.Rep. No. 1827, 81st Cong., 2d Sess., 13 (1947), quoted in
Teamsters v. NLRB, 365 U. S. 667,
365 U. S.
673-674.
The National Labor Relations Board and the courts have ruled
that union demands for hiring halls are a mandatory subject of
collective bargaining, and that strikes to obtain such provisions
are protected activity.
See, e.g., Houston Chapter, Associated
General Contractors, 143 N.L.R.B. 409, enf'd,
349 F.2d 449
(CA5); NLRB v. Tom Joyce Floors, Inc., 353 F.2d 768, 771
(CA9).
Cf. Teamsters v. NLRB, supra, at
365 U. S.
672-673,
365 U. S.
676.
[
Footnote 29]
See Carroll, 241 F. Supp. at 881. We have, in fact,
found no case holding that a union may extract such fees from
independent agents who represent union members.
[
Footnote 30]
As already indicated, the franchise fees are not segregated in
any manner, but merely deposited in the union's general fund.
[
Footnote 31]
The respondents offer union hiring hall fees as an analogy in
support of Equity's collection of franchise fees. In that context,
the respondents argue, without citation, that a union may impose
reasonable fees upon employers to meet the costs of maintaining a
union-run hiring hall. But even if the respondents' statement of
labor law is correct, the analogy would not be persuasive. Assuming
that hiring hall fees are so imposed, the fees are borne by parties
who directly benefit from the employment services of the hiring
halls and are collected by the entities that provide them. That is
not true in the present case.
The view expressed in the separate opinion filed today as to who
are the beneficiaries of the franchising system will undoubtedly
surprise the agents who brought this lawsuit.
Post at
451 U. S.
724.
JUSTICE BRENNAN, with whom THE CHIEF JUSTICE and JUSTICE
MARSHALL join, concurring in part and dissenting in part.
I join all but
451 U. S. That
part holds that respondents' exaction of a franchise fee is not a
"permissible component of the exempt regulatory system."
Ante at
451 U. S. 722.
Rather, I agree with the Court of Appeals that the approximately
$12,000 collected annually in fees is not "incommensurate with
Equity's expenses in maintaining a full-time employee to administer
the system," 622 F.2d 647, 651 (CA2 1980), and thus is not
"unconnected with any of the goals of national labor policy which
justify the antitrust exemption for labor,"
ibid.
The Court justifies its conclusion by suggesting that, since the
union could increase its dues to offset the revenue lost from
invalidation of the fee system, "there is no reason to believe that
any of [the union's] legitimate interests would be affected," if
the fee system were found to violate the antitrust laws.
Ante at
451 U. S. 722.
The union could, of course, raise its dues, but the issue here is
whether the conceded antitrust immunity of the franchising system
includes the franchise fee.
I find somewhat incongruous the Court's conclusion that an
incident of the overall system constitutes impermissible
regulation, but that agents in general may be significantly
Page 451 U. S. 724
regulated because they are not a "nonlabor group." This
incongruity is highlighted by the similarity between union hiring
halls and the franchising system, a similarity which the Court
itself acknowledges:
"Equity's franchise system operates as a substitute for
maintaining a hiring hall as the representative of its members
seeking employment."
Ante at
451 U.S.
721. The Court disregards this similarity in concluding that
the franchising system does not "directly benefit" the agents who
are required to pay the fees.
Ante at
451 U. S. 722,
n. 31. It reaches this conclusion by incorrectly assuming that the
only parties who directly benefit from the hiring hall and the
franchising system are employers and employees and producers and
actors, as the case may be. But surely the agents also benefit from
the franchising system, which provides an orderly and protective
mechanism for pairing actors who seek jobs with producers who seek
actors. The system is thus the means by which the agents ultimately
receive their commissions; it is as much the source of their
livelihood as it is that of the actors.
Because the fee is an incident of a legitimate scheme of
regulation, and because it is commensurate in amount with the
purpose for which it is sought, I would also affirm this holding of
the Court of Appeals.